Recording Transactions: Debit and Credit Rules Quiz Leave a Comment / Accounting Quiz / By admin Welcome to Recording Transactions: Debit and Credit Rules. Here are the questions you can practice with multiple choice answers. Answer all the questions and see your scores. 1. When a company borrows $10,000 from a bank, how does it affect the accounting equation? Assets increase by $10,000 Liabilities increase by $10,000 None 2. If a company purchases equipment for $5,000 by paying $2,000 in cash and the rest on credit, how does it affect the accounting equation? Assets increase by $5,000 Assets increase by $2,000 and Liabilities increase by $3,000 None 3. When a company pays $1,500 in rent for the month using cash, how does it affect the accounting equation? Assets decrease by $1,500 Liabilities decrease by $1,500 None 4. If a company receives $3,000 in cash for services provided, how does it affect the accounting equation? Assets increase by $3,000 Owner's Equity increases by $3,000 None 5. What is the impact of recording depreciation expense on a company's assets? Assets increase Assets decrease None 6. When adjusting entries are made for accrued expenses, which accounts are affected? Assets and Liabilities Expenses and Revenues None 7. If a company pays $500 in salaries to employees, how does it affect the accounting equation? Assets decrease by $500 Owner's Equity decreases by $500 None 8. How does recognizing revenue from services provided affect the accounting equation? Assets increase Owner's Equity decreases None 9. What happens to the accounting equation when a company records an increase in accounts receivable? Assets decrease Assets increase None 10. When a company issues stock to investors for $10,000, how does it affect the accounting equation? Assets increase by $10,000 Owner's Equity increases by $10,000 None 11. What is the Accounting Equation? Assets = Liabilities + Revenue Assets = Liabilities + Owner's Equity None 12. If a company records a purchase of equipment on credit, which part of the Accounting Equation is affected? Assets Liabilities None 13. How does a withdrawal by the owner impact the Accounting Equation? Assets decrease Owner's Equity decreases None 14. What entry is made to record revenue earned but not yet received in cash? Debit Cash, Credit Revenue Debit Accounts Receivable, Credit Revenue None 15. Which financial statement is directly derived from the Accounting Equation? Income Statement Balance Sheet None 16. If a company pays off a portion of its outstanding loans, how does it affect the Accounting Equation? Assets increase Liabilities decrease None 17. How are adjusting entries related to the Accounting Equation? They impact assets only ) They ensure the equality of the Accounting Equation is maintained None 18. In the Accounting Equation, what represents the residual interest of the owner? Assets Owner's Equity None 19. If a company issues common stock for cash, which part of the Accounting Equation is affected? Assets Owner's Equity None 20. What happens to the Accounting Equation when a business incurs an expense on credit? Assets increase Liabilities increase None Time's up
